Administrative agencies define and implement statutes through their rule-making and adjudicatory powers. Part of those powers includes administrative agency orders. Administrative law judges within the agency make decisions by issuing orders based upon evidence presented in a case. These judges have the authority to issue orders within the scope of statutes and the administrative agency’s rule-making that further interprets statutes. Companies must comply with administrative agencies’ interpretations of statutes that affect their entire business operations.

Sources of Law

A statute is a bill passed by Congress or a state legislative branch. Under the federal executive branch, for example, the president has the power to veto or sign a bill into law. When bills are approved and signed into law, they are published in chronological order in the United States Code. State and federal administrative agencies can issue regulations within their specific subject areas and provide interpretations to existing laws.

Administrative Agency's Power

Federal and state legislative branches may grant rule-making powers to administrative agencies. Administrative agencies promulgate regulations according to federal or state laws. Each agency is responsible for a specific area of law and has the authority to investigate and enforce laws within its specialty. Administrative agencies interpret the laws and apply guidelines to help them enforce the laws. These rules carry the force of law, and administrative agencies may require businesses to strictly comply or risk the effects of noncompliance. For instance, a company may be required to obtain a permit in order to engage in a particular enterprise or type of work.

Creation of Agencies

Federal administrative agencies have the power to issue regulations and administrative orders from statutes passed by Congress. Congress creates agencies by passing enabling legislation and defining the agency’s power to enforce rules and adjudicate proceedings regarding particular areas of law. State administrative agencies have the same powers and duties of enforcing rules and orders on issues that affect state law. Agencies may not issue regulations outside the scope of their statutory authority. The Administrative Procedures Act further provides limitations on administrative agencies’ power to make rules, settle cases and conduct investigations. The act provides uniform standards to the way administrative agencies promulgate rules and conduct adjudicative proceedings.


Prior to issuing an order, an administrative law judge must conduct hearings that are within the authority of the administrative agency. Adjudication begins when a complaint is filed regarding an issue between two parties. Disputes may arise over the interpretation of statutes and existing administrative agency rulings.

Enforcement Powers

Administrative agencies have powers to enforce statutes and their interpretations of statutes within their area of expertise. Within these enforcement powers, the agencies perform investigations to ascertain whether there have been any violations of laws. Administrative agency representatives can enter the private property of a company to conduct routine inspections and investigations pursuant to the agencies’ enforcement powers. The searches must be in compliance with the law. They also have prosecutorial authority within their enforcement powers.